Quit Claim Deeds In Arizona

[Michigan Lady]

What is the name of your state? Michigan. My problem is I will be involved in a divorce soon, and would like to protect inherited Az. real estate (2 houses). I have decided to either add my kids names to the deeds of them with mine, or sell them to my kids for $1.00 each, which ever would protect them the best. One of my kids is here in Mich., the other in Colorado Springs. Would my children be subject to any kind of taxation, Federal or State, as a result of doing this? (After the divorce is final, I intend to sell them anyway, but do not wish to be blocked from doing that during the divorce if I get a reasonable offer before).

 

[abezon]

Do not attempt this before talking to your divorce lawyer. You could significantly hurt you legal position in the divorce.

 

[Michigan Lady]

Thanks for you response. Why would that have an adverse effect? Just to give you a little more backround, I have already talked to a lawyer here in Mich., was told to go ahead, no one has filed yet, (husband cannot establish Mi. residency requirements) to file first, (needs to be here 180 days and he just changed his driver's license 3 weeks ago). I could establish residency requirements in either state (Az. is 90 days) before he could. They are inherited properties from MY father, and I would like to add the kids names in the event anything was to happen to me between now and the end of the divorce so I could insure my children's inheritance, in addition, to not having them involved in divorce proceedings. Az. is "community property" state, inheritance IS protected, Mich. is "equitable distribution", inheritance is SUPPOSED to be exempt, however, I just want to make sure that the properties go to the rightful people (my kids). This is just assurance for me and my kids, so there are is no question legally regarding these properties in my divorce. This is a 2nd marriage for both "my husband" and I, and we have no children together. Still would like to make sure that the kids would not have any tax liablity with the Feds or the state of Az. or their respective residency states?

 

[abezon]

If your worry is about something happening to you before the divorce is final, your best protection is a new will. Putting the kid's names on the deeds won't prevent the court from looking at the property, since your name will still be on the deeds. You'll also have to file a gift tax return, which will reduce your eventual tax-free estate when you die. Also, when the kids gift the property back to you, they'll have to file gift tax returns. Why not just sell now, since that's what you're planning to do?

 

[Michigan Lady]

To my knowledge, I am assuming, this is done all the time by tons of other people, and I am certain, not everyone is claiming "gift taxes". I have no intention of defrauding the IRS!, whether I am getting divorced or not, I would like to have the kids names on those houses. Additionally, in the event of the divorce, my understanding would be that he would only be entitled to 1/2 of my 1/3rd of the equity accumulated from the value of the houses when my dad died to the value of it now, minus improvement expenses, equity would be "negative". I could go out there and sell them, however, the money is still out there, and, if, by some chance he manages to convince a judge he is entitled to some of it, he'll get whatever, in addition to the fact that if he files an order that money can be held up until the divorce is overwith (and I am certain his atty. would do just that), or if the court believes I can well afford it might order me to pay him spousal support as he is not working and I would have the assets to do it. If I leave them out there, (I realize he could get an order to stop me from selling, but that would not be in his best interest as he is a gambler and is broke and am certain he'd like me to sell to get me in the previously stated position) I can at least prove to the court that I have expenses too, and cannot afford to pay him any support during the divorce, as I am paying all bills on 3 houses, of which his name is on one in Mi. This is definately a "CATCH 22" situation!.